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For long term sustainability, business entities need to build customer satisfaction.
Customer Creation:
Possibly, buyers buy from that business entity they perceive offers the highest
customer delivered value.
CDV is the difference between Total Customer Value and Total Customer Cost.
Total Customer Value is the bundle of benefit customers expect from a product/ service.
Total Customer Cost is the bundle of cost customer expect to incur in evaluating/ obtaining of
using product or services.
Eg.- Two Wheeler……. Choice - Hero Honda Splendor / Kawasaki Bajaj Boxer.
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Deviation from CDV could be due to,
- Policy of buying lowest price products.
- Long term benefits not appreciated.
- Other reason (Personal Friendship).
Long term benefit is not appreciated always. When it comes to cost, people goes for lower
one without realizing that they may now profit for a longer period.
Eg.- Philips CFL of 18 watts (135/=)
Chinese CFL of 18 watts (35/=)
Customer Satisfaction:
VALUE CHAIN:
- Proposed by Michael Porter.
- Tool to create higher customer value.
- Identifies main activities that creates (value + cost) in a business.
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Task of Business Entity is to examine costs & performance in each value creating activity &
try to improve it.
Success depends on - Performance of each unit.
- Co-ordination.
Core business process involving cross functional inputs or co- operation needs to be managed
smoothly. Specifically,
- New product realization process.
- Inventory management process.
- Order- to- remittance process
- Customer service process
Customer Retention:
Relationship Marketing:
Customer development cycle/ process.
Starting point – Suspects/ Anyone who may possibly buy product/ service.
Prospect: People who have strong potential interest in product & ability to pay for it.
Disqualified Prospect: Company rejects due to poor credit/ unprofitibality.
Client: Buy only from company when they buy.
Advocate: Customer who praise company & encourages others to buy.
Partner: Customer & company work together actively to promote company.
Developing loyal customer increases company revenues. However, company needs to spend
more to built customer loyalty.
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SUSPECTS PROSPECTS DISQUALIFIED
PROSPECTS
1ST TIME
CUSTOMER
INACTIVE
REPEAT OR
CUSTOMER EX- CUCTOMER
PARTNERS
CLIENTS
ADVOCATES
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Adding Financial benefits:
Types could be – Frequency Marketing Programs.
- Club Marketing Programs.
Supply customers with special equipment/ services to help them manage their work.
Eg.- computer hardware supplier may offer basic computer training.
Ultimately, Marketing has been the act of attracting & retaining profitable customer.
Profitable Customer: Person/ Household/ Company that over time yields revenue that
exceeds by an acceptable amount the company’s cost of attracting/ selling/ servicing hat
customer.